Lending Crisis May Soon Be Over
Monday, October 15th, 2007The darkest days in the housing industry may soon be behind us. Although the National Association of REALTORS® has reported dismal figures for existing home resale’s for June, July, August and September for this year other figures such as new home and condo sales hint of renewed consumer confidence on the horizon.
With the drop in both interest rates and the median home price nationally it may be time to purchase as the cost of housing is more affordable now than in recent years.
While the sub-prime lending fiasco made great headlines for the liberal press the reality is that it affected a very small segment of the housing market. Even a smaller portion of the market was affected here in Missouri as the sub-prime loans were never truly embraced by local lenders. Missouri banks and mortgage companies based in Missouri primarily stayed with conventional loans requiring income verification and down payments of 10-20%.
The indirect affect on the local housing market was the shaken confidence of home buyers with all the media attention given to the credit crunch created by sub-prime loans going into default even though it was a national, not a local phenomenon.
While the Dow quickly soared back to over 14000 shortly after the Federal Reserve dropped interest rates by a half of a point, today Wall Street fell 140 points at the time of this article after Citigroup’s dismal earnings numbers and news of a potential $100 billion emergency fund to help out three of the largest U.S. banks hit by the chaos created by sub-prime mortgages.
So is the worst behind us? That depends entirely on consumer confidence really and unfortunately the media can all too easily sway and shaken this confidence. The press has begun irresponsibly throwing about the “recession” word of late. Keep in mind that a recession is defined by two consecutive quarters of negative GDP (Gross Domestic Product) and we have yet to log the first. Is this once again an attempt of the media to create rather than report the news? Given the deep hatred of President Bush by the liberal press it is a distinct possibility.
Before you decide not to buy another home or continue to put off a purchase you should do the research for yourself. This is far too important of a decision to leave up to a clearly biased media. And while researching check out how much new housing starts have declined in the past few months. This will lead to a much lower inventory in months to come and could begin a substantial increase in new home costs. Especially if the Federal Reserve again cuts interest rates soon as has been predicted by many.
~Rhonda McMillan
